Income Diversification Is Coinbase An Attractive Long-Term Investment?

On January 13, Coinbase announced in a blog post that it was acquiring the crypto derivatives exchange FairX, which is said to be regulated by the U.S. Commodity Futures Commission (CFTC).

Coinbase said the acquisition is a key step in its offering of crypto derivatives to U.S. retail and institutional clients. After the acquisition, Coinbase said it plans to first provide derivatives trading capabilities to FairX’s existing partner ecosystem, and then leverage FairX’s infrastructure to provide crypto derivatives to all Coinbase customers in the United States. It is reported that the acquisition is expected to be completed in the first fiscal quarter of this year.

In fact, when it comes to compliance, Coinbase has made a lot of efforts. It also previously received approval for cryptocurrency custody operations in Germany. Brian Armstrong, CEO of Coinbase, said that we plan to list all legal and viable cryptocurrency assets.

In addition, the financial report shows that Coinbase’s total revenue in the third quarter was $1.31 billion, down 41.2% from the previous quarter ($2.23 billion). The lack of results was mainly due to seasonal fluctuations in Bitcoin trading. Tianfeng Securities pointed out that in terms of long-term value, various indicators are improving, and the company’s business diversification continues. The currency structure was further optimized, customer stickiness continued to increase, institutional coverage continued to increase, a number of businesses continued to develop, Coinbase Cloud, Coinbase Wallet, and Coinbase NFT were carried out in an orderly manner, and the compliance layout continued to improve.

It is worth mentioning that on the first day of Coinbase listing, ArkInvest founder and CEO Cathie Wood bought nearly $250 million in Coinbase stock. At present, Coinbase is the fifth largest holding of the Ark Innovation ETF (ARKK), with a weight of about 5.3%, and the second largest holding of the Ark Fintech Innovation ETF (ARKF), with a weight of nearly 9.1%.

As a leading cryptocurrency exchange, Coinbase’s product growth plans make it an attractive long-term investment, with Coinbase accounting for about 10 percent of crypto market spot trading volume in 2021, according to an analyst and research associate at investment management firm Ark Invest. In the long run, Coinbase will continue to capture the trading volume market share, which is estimated to accelerate growth and make real innovations in terms of products, which will increase the volume and stickiness of users on the platform.

Philip Gradwe, chief economist at Chainalysis, said in an email that competition around cryptocurrency app stores is unfolding, and an important lesson from Web 2.0 is that consumers love platforms, and I don’t think Web 3.0 will change that. No cryptocurrency platform currently has customer relationships and aggregates suppliers. I expect many companies will be racing to build this platform by 2022, with Coinbase being the leader as it integrates Decentralized Finance (DeFi) and NFTs.

Separately, Bank of America has upgraded Coinbase Global Inc (NASDAQ:COIN) to buy from neutral, and analyst Jason Kupferberg said Coinbase revenue is diversifying, a trend that is likely to continue in 2022 and beyond accelerate. Additionally, he predicts that by 2023, Coinbase subscription and services revenue will account for 16% of total revenue, and factors driving this trend may include: blockchain rewards, user learning, NFT trading platforms and DeFi products that have not yet officially launched .

Sensor Tower data suggests that with Coinbase app downloads growing and average revenue per user (ARPU) accelerating, there is potential for a significant boost in the company’s fourth-quarter forecast. Analysts raised the company’s fourth-quarter ARPU forecast to $45 from $30, and net revenue forecast to $1.44 billion from $958 million.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2022-01-13 08:42
Next 2022-01-13 08:45

Related articles